M1_IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point for the manual process (in units)? b) What is the break-even point for the mechanized process (in units)? c) A point of indifference for two processes is quantity at which each process generates the same amount of profit (review video). What is the point of indifference for the two processes? (Hint: 1) Use equations to set profit of manual process equal to mechanized process – and solve for quantity; 2) (Excel) If you have a break-even for each process – add another cell the calculates the difference for the profits between the two processes and have only one cell that represents quantity that be used to calculates costs/revenues for each process and use Goal Seek to calculate quantity that would set the difference to zero). d) Which process would you select if the quantity that is sold is greater than the quantity calculated as the point of indifference? e) Which process would you select in the quantity sold is less than the quantity calculated as the point of indifference?
M1_IND3. A distributor of fasteners is opening a new plant and considering whether to use a...
M1 IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. a) What is the break-even point...
M1 IND3. A distributor of fasteners is opening a new plant and considering whether to use a mechanized process or a manual process to package the product. The manual process will have a fixed cost of $36,234 and a variable cost of $2.14 per bag. The mechanized process would have a fixed cost of $84,420 and a variable cost of $1.85 per bag. The company expects to sell each bag of fasteners for $2.75. What is the break-even point for...
Zan Azlott and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food processing experience, and Angela has extensive commercial food preparation experience. The process will consist of opening crates of lettuce and then sorting. washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they think they can adequately estimate demand, fixed costs, revenues, and variable cost per bag of lettuce....
I need help with E, F, and G. I have provided the answers for parts A-D. Zan Azlett and Angela Zesiger have joined forces to start A&Z Lettuce Products, a processor of packaged shredded lettuce for institutional use. Zan has years of food processing experience, and Angela has extensive commercial food preparation experience. The process will consist of opening crates of lettuce and then sorting, washing, slicing, preserving, and finally packaging the prepared lettuce. Together, with help from vendors, they...
QUESTION 5 (20 points) A firm is considering two capacity alternatives: Alternative A and Alternative B. Alternative A would have an annual fixed cost of $40,000 and variable costs of $400 per unit. Alternative B would have annual fixed costs of $60,000 and variable costs of $200 per unit. Revenue per unit is expected to be $1000 per unit for Alternative A and $1050 for Alternative B. Complete the following parts using Excel. a) Create a graph for each alternative...
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tell me what I have incorrect and how to get the right answer.
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Cheryl Montoya picked up the phone and called her boss, Wes Chan, the vice president of marketing at Piedmont Fasteners Corporation: “wes, I'm not sure how to go about answering the questions that came up at the meeting with the president yesterday." What's the problem?" "The president wanted to know the break-even point for each of the company's products, but I am having trouble...
Entertaining Bouquets (EB) makes and sells flower bouquets. EB is considering opening a new store in the local mall. The mall has several empty shops and EB is unsure of the demand for its product. The mall has offered EB two alternative rental agreements. The first is a standard fixed-rent agreement where EB will pay the mall $5,800 per month. The second is a royalty agreement where the mall receives $8 for each bouquet sold. EB estimates that a bouquet...
Use the graphical approach to CVP analysis to solve the following problem. Valley Peat Ltd, sells peat moss for $10 per bag. Variable costs are $7.50 per bag and annual fixed costs are $100,000 a. How many bags of peat must be sold per year to break even? Number of bags bags/year b. What will be the net income for a year in which 60,000 bags of peat are sold? (Round your answer to the nearest whole number.) Net income...
Patterson Products Inc. is considering an upgrade to its
manufacturing equipment. The two upgrade options under
consideration are shown below.
Option 1
Option 2
Direct material cost per unit
$
93.6
$
62.4
Direct labour cost per unit
$
66
$
59
Variable overhead per unit
$
27.6
$
55.4
Fixed manufacturing costs
$
2,160,000
$
5,592,000
The selling price of the company’s product is $312 per unit with
variable selling costs of 10% of sales. Fixed selling and
administrative...
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $9 each or to produce them in-house. Either of two processes could be used for in-house production; Process A would have an annual fixed cost of $170,000 and a variable cost of $5 per unit, and Process B would have an annual fixed cost of $190,000 and a variable cost of $4 per...